Go Back  British Expats > Living & Moving Abroad > USA
Reload this Page >

UK state pension and USA social security

UK state pension and USA social security

Old Mar 15th 2015, 9:29 am
  #661  
Heading for Poppyland
 
robin1234's Avatar
 
Joined: Jul 2007
Location: North Norfolk and northern New York State
Posts: 10,387
robin1234 has a reputation beyond reputerobin1234 has a reputation beyond reputerobin1234 has a reputation beyond reputerobin1234 has a reputation beyond reputerobin1234 has a reputation beyond reputerobin1234 has a reputation beyond reputerobin1234 has a reputation beyond reputerobin1234 has a reputation beyond reputerobin1234 has a reputation beyond reputerobin1234 has a reputation beyond reputerobin1234 has a reputation beyond repute
Default Re: UK state pension and USA social security

Originally Posted by nun View Post
Cashing out would not avoid WEP. You should tell SSA the lump sum or the DC accumulation and they will calculate an equivalent pension amount to apply to WEP. This is what happens with state employees that have DC accumulations.
I didn't know this. I always assumed that cashing out prior to taking SS would avoid WEP. How is the WEP amount affected by taking weppable income earlier rather than later? For instance - say I take a British final salary pension at age 60, so it pays 100 pounds a month. If I'd waited till age 65 it would have paid significantly more. Then I take SS at age 66. Do they somehow take the WEP-free income I took between age 60 and age 66 into account when WEP is calculated?
robin1234 is offline  
Old Mar 15th 2015, 6:09 pm
  #662  
nun
BE Forum Addict
 
nun's Avatar
 
Joined: Aug 2004
Posts: 4,721
nun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond repute
Default Re: UK state pension and USA social security

Originally Posted by kodokan View Post
What do they have DC accumulations in, nun; is it 401ks or a more traditional pension wrapper?

I am very much mentally equating the new UK pension environment with a 401k - contributions based on a designated percentage of salary, contributions from both employee and employer, tax-deferred, contribution limits, money can be entirely withdrawn or bit by bit upon reaching a certain age subject to paying the tax, etc. Do state workers get WEP'd based on their accumulated 401k pot, and if not, why would taking all the money out of a new-style UK pension, perhaps 10-15 years previously, trigger a need for it?
If a state worker has an old fashioned final salary pension plan then it's just their monthly pension amount that is used to calculate WEP....simple. However, some US state workers have compulsory 401a DC pension accounts so the SSA needs to calculate an equivalent monthly income. This is a simple actuarial calculation. When the state employee stops working for the state a statement of the 401a balance is given to SSA and is used to calculate WEP when the employee applies for SS.

https://secure.ssa.gov/apps10/poms.nsf/lnx/0300605364

I imagine that if someone had a foreign DC pension, took a lump sum and then filed for SS later then the SSA would want to know the amount of the lump sum so it can do the same WEP calculation.

Last edited by nun; Mar 15th 2015 at 6:22 pm.
nun is offline  
Old Mar 15th 2015, 6:18 pm
  #663  
nun
BE Forum Addict
 
nun's Avatar
 
Joined: Aug 2004
Posts: 4,721
nun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond repute
Default Re: UK state pension and USA social security

Originally Posted by robin1234 View Post
I didn't know this. I always assumed that cashing out prior to taking SS would avoid WEP. How is the WEP amount affected by taking weppable income earlier rather than later? For instance - say I take a British final salary pension at age 60, so it pays 100 pounds a month. If I'd waited till age 65 it would have paid significantly more. Then I take SS at age 66. Do they somehow take the WEP-free income I took between age 60 and age 66 into account when WEP is calculated?
I believe that SSA will just look at you monthly income when you apply for SS. If you took a lump sum from a DC account a number of years before you apply for SS then SSA would want to know that lump sum and exactly when you took it and would just apply standard actuarial tables to work out the monthly income for WEP purposes.
nun is offline  
Old Mar 15th 2015, 6:24 pm
  #664  
nun
BE Forum Addict
 
nun's Avatar
 
Joined: Aug 2004
Posts: 4,721
nun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond repute
Default Re: UK state pension and USA social security

Originally Posted by jb82 View Post
Would that be the case if say you cash it out at 55 long before you take your social security? Since the foreign retirement account wouldn't exist any more?
Yes. You are required to tell the SSA about any non-SS pensions. Even if you cashed out at 55 you should tell SSA and they will calculate a pension amount based on the lump sum amount, when you took it and standard actuarial tables.

Last edited by nun; Mar 15th 2015 at 6:27 pm.
nun is offline  
Old Mar 15th 2015, 6:38 pm
  #665  
BE Forum Addict
 
Joined: Apr 2011
Location: Ohio
Posts: 1,793
kodokan has a reputation beyond reputekodokan has a reputation beyond reputekodokan has a reputation beyond reputekodokan has a reputation beyond reputekodokan has a reputation beyond reputekodokan has a reputation beyond reputekodokan has a reputation beyond reputekodokan has a reputation beyond reputekodokan has a reputation beyond reputekodokan has a reputation beyond reputekodokan has a reputation beyond repute
Default Re: UK state pension and USA social security

Originally Posted by nun View Post
If a state worker has an old fashioned final salary pension plan then it's just their monthly pension amount that is used to calculate WEP....simple. However, some US state workers have compulsory 401a DC pension accounts so the SSA needs to calculate an equivalent monthly income. This is a simple actuarial calculation. When the state employee stops working for the state a statement of the 401a balance is given to SSA and is used to calculate WEP when the employee applies for SS.

https://secure.ssa.gov/apps10/poms.nsf/lnx/0300605364

I imagine that if someone had a foreign DC pension, took a lump sum and then filed for SS later then the SSA would want to know the amount of the lump sum so it can do the same WEP calculation.
Thanks for the explanation and link nun - I'll go back to just assuming full WEP will be applied, and be pleasantly surprised should the deduction be lower!
kodokan is offline  
Old Mar 15th 2015, 9:21 pm
  #666  
Forum Regular
 
Joined: Mar 2015
Posts: 74
jb82 is an unknown quantity at this point
Default Re: UK state pension and USA social security

Originally Posted by nun View Post
Yes. You are required to tell the SSA about any non-SS pensions. Even if you cashed out at 55 you should tell SSA and they will calculate a pension amount based on the lump sum amount, when you took it and standard actuarial tables.
Okay thanks for the explanation. I can agree with you on this one

Last edited by jb82; Mar 15th 2015 at 9:27 pm.
jb82 is offline  
Old Mar 15th 2015, 11:24 pm
  #667  
R50
Just Joined
 
Joined: Sep 2014
Posts: 10
R50 is an unknown quantity at this point
Default Re: UK state pension and USA social security

Originally Posted by jb82 View Post
Okay thanks for the explanation. I can agree with you on this one
Based upon above continued discussion, I will be 66 yrs next year at full retirement age. My wife also have UK State Pension and will be 62 in 2018. If she claimed her US SS will her UK State Pension will be liable to WPED before she entitle to UK State Pension at Full Retirement age of 66 in 2022?. None of us have 30 yrs of full US SS contribution.
R50 is offline  
Old Mar 16th 2015, 12:09 am
  #668  
 
lansbury's Avatar
 
Joined: Apr 2005
Location: Milwaukie, Oregon
Posts: 9,377
lansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond repute
Default Re: UK state pension and USA social security

Originally Posted by R50 View Post
Based upon above continued discussion, I will be 66 yrs next year at full retirement age. My wife also have UK State Pension and will be 62 in 2018. If she claimed her US SS will her UK State Pension will be liable to WPED before she entitle to UK State Pension at Full Retirement age of 66 in 2022?. None of us have 30 yrs of full US SS contribution.
UK pension is not subject to WEP, US SS is. If she takes US SS before she takes her UK pension, she must then notify the SSA when she takes her UK pension. Then her US SS will be recalculated to allow for the WEP.

If she takes the UK pension before US SS, her SS will be calculated from the start to allow for WEP.

Last edited by lansbury; Mar 16th 2015 at 12:13 am.
lansbury is offline  
Old Mar 16th 2015, 1:32 am
  #669  
Forum Regular
 
Joined: Jun 2014
Location: Long Beach, CA
Posts: 94
UK2US1979 is an unknown quantity at this point
Default Re: UK state pension and USA social security

Originally Posted by dunroving View Post
Could you provide a link that supports this statement?

In prior rounds of this never-ending discussion, various knowledgeable people have pointed towards specific wording from US SS Web pages, or the WEP modeller. At least then it's possible to discuss factual information rather than being unsure whether a statement of fact is just someone's perception or opinion of the current situation.
Sorry for the delayed response. I was talking in the context of UK basic state pension, not all pensions. This has been debated here in detail (with agreements and disagreements) and the position SSA seems to have taken on this issue, i.e The contributions are/were paid out of the salary. Although, there were other ways one could make contributions and or earn credits.

I dont necessarily agree with the SSA position here. nun has also opined on this in various posts.
UK2US1979 is offline  
Old Mar 16th 2015, 10:34 am
  #670  
Just Joined
 
Joined: Mar 2015
Posts: 1
Alansmith is an unknown quantity at this point
Default Re: UK state pension and USA social security

An agreement between the United States and the United Kingdom (U.K.) improves Social Security protection for people who work or have worked in both countries. It helps many people who, without the agreement, would not be eligible for monthly retirement, disa
Alansmith is offline  
Old Mar 16th 2015, 2:12 pm
  #671  
Forum Regular
 
Joined: Aug 2013
Location: Los Angeles
Posts: 92
Westham is an unknown quantity at this point
Default Re: UK state pension and USA social security

Originally Posted by Alansmith View Post
An agreement between the United States and the United Kingdom (U.K.) improves Social Security protection for people who work or have worked in both countries. It helps many people who, without the agreement, would not be eligible for monthly retirement, disa
I'm not sure there is an improvement for many caught up with the Wep issue.
Westham is offline  
Old Mar 16th 2015, 2:47 pm
  #672  
BE Forum Addict
 
Joined: Aug 2013
Location: Eee Bah Gum
Posts: 2,363
durham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond reputedurham_lad has a reputation beyond repute
Default Re: UK state pension and USA social security

Originally Posted by Westham View Post
I'm not sure there is an improvement for many caught up with the Wep issue.
Yep, when I heard WEP my response was WTF.
durham_lad is offline  
Old Mar 16th 2015, 5:03 pm
  #673  
 
lansbury's Avatar
 
Joined: Apr 2005
Location: Milwaukie, Oregon
Posts: 9,377
lansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond repute
Default Re: UK state pension and USA social security

Originally Posted by Alansmith View Post
An agreement between the United States and the United Kingdom (U.K.) improves Social Security protection for people who work or have worked in both countries. It helps many people who, without the agreement, would not be eligible for monthly retirement, disa
A link to that agreement might be useful.
lansbury is offline  
Old Mar 16th 2015, 6:39 pm
  #674  
Under blue skies
 
WEBlue's Avatar
 
Joined: Mar 2011
Location: East Anglia->New England
Posts: 3,616
WEBlue has a reputation beyond reputeWEBlue has a reputation beyond reputeWEBlue has a reputation beyond reputeWEBlue has a reputation beyond reputeWEBlue has a reputation beyond reputeWEBlue has a reputation beyond reputeWEBlue has a reputation beyond reputeWEBlue has a reputation beyond reputeWEBlue has a reputation beyond reputeWEBlue has a reputation beyond reputeWEBlue has a reputation beyond repute
Default Re: UK state pension and USA social security

Originally Posted by lansbury View Post
A link to that agreement might be useful.
International Programs - Totalization Agreement with the United Kingdom
WEBlue is offline  
Old Mar 16th 2015, 8:55 pm
  #675  
 
lansbury's Avatar
 
Joined: Apr 2005
Location: Milwaukie, Oregon
Posts: 9,377
lansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond repute
Default Re: UK state pension and USA social security

Yes I know about that one, but where is the agreement that improves my social security protection. About the only thing this agreement does for the average Brit pensioner is protect the COL increases if you live in the US.

One thing I did reread in that agreement and I knew I had read somewhere and mentioned it earlier in this thread. You can claim a UK State pension at a social security office.

You can apply for U.K. benefits at any U.S. Social Security office by completing application form SSA-2490.
lansbury is offline  

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.